One of the key dangers facing many small or medium sized businesses is the death, illness or injury of a business partner or key employee. If something happens to a business partner, their family is likely to want to cash in on his share of the business. If something happens to an employee with key skills, you may find that replacing them is either impossible or comes at great cost.
Business protection is designed to guard against these risks by providing the surviving partners or the firm as a whole with an insurance policy against the event of the death, illness or injury of a business partner or key employee.
How does business protection work?
A business protection plan should involve life and serious illness cover against the event of the death or serious illness of any of the partners. A key man assurance policy can be put in place to cover the death or serious illness of a key employee.
The business should have a plan in place and in writing that provides for the firm to buy up the shares of any partner or large shareholder who dies or becomes incapacitated. The insurance policy provides the firm with the funds to do this.
In the case of key man assurance, the insurance policy will simply help to compensate the firm for the profits associated with anything happening to key employees.